The "Greenspan Doctrine" - Central Banks Should Not Try to Prick

question 27

Multiple Choice

The "Greenspan doctrine" - central banks should not try to prick bubbles - was based on which of the following arguments?

• A) Asset-price bubbles are nearly impossible to identify.
• B) Monetary actions would be likely to affect asset prices in general, rather than the specific assets that are experiencing a bubble.
• C) Raising interest rates has often been found to cause a bubble to burst more severely.
• D) Monetary policy actions to prick bubbles can have harmful effects on the aggregate economy.
• E) all of the above.

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Definitions:

Derived Trait

An evolved feature that distinguishes a species from its ancestors, arising during the species' history.

Phylogenic Study

The study of the evolutionary development and diversification of a species or group of organisms.

Polyploidy

The state where an organism possesses more than two full sets of chromosomes, frequently observed in plants and certain animal species.

Sympatric Speciation

The evolutionary process through which new species evolve from a single ancestral species while inhabiting the same geographic region.